After the radical reforms undertaken in the 1980s, the NZ tax system has long been regarded as one of
most efficient within the OECD, and is based on a comprehensive income approach. Looking forward, the
country will require a tax regime that helps the economy to continue raising living standards, supports
savings and investment and copes with emerging pressures such as increasing geographic mobility of
labour and capital. In this context, it will be important to have in place a clear long-term direction for the
tax system to guide reforms. There are at least two broad options that are worth considering: adapting the
system within a comprehensive income approach or adopting a dual income tax system. Future changes to
the tax system need to be consistent with the approach ultimately adopted. In any case, a number of
limitations of current tax bases will need to be tackled. This Working Paper relates to the 2007 OECD Economic Survey of New Zealand (www.oecd.org/eco/surveys/nz).
